Striking details have emerged of dire warnings from Northamptonshire CC’s former section 151 officer of a “financial crisis” at the council which were subsequently ignored in 2015.
Criticisms of senior management and their “defensive and non-compliant behaviour” approach to tackling savings were laid bare in an explosive letter from then finance director Matt Bowmer to chief executive Paul Blantern, dated 29 October of that year.
In that letter Mr Bowmer confirmed his intention to issue a section 114 notice within 21 days “if there are not robust plans in place to both restore effective financial management arrangements at the council and to bring spend back in line with the available resource”.
He said measures to mitigate an overspend of £43m seven months into the financial year were predominantly “one-offs”, an approach he described as “greatly alarming” and “unsustainable” as the balance sheet was “becoming increasingly weak”.
The letter has emerged following a freedom of information request by Sarah Ward, local democracy reporter at the Northamptonshire Telegraph, and shared with LGC.
In a damning summary of the inner-workings of the council at the time, Mr Bowmer said: “We are experiencing a significant financial crisis but there is avoidance of the term and a lack of action appropriate for the situation which we find ourselves in.
“At the heart of this is the corrosion of our financial management arrangements over the past eighteen months; there has been a change of culture and behaviour where overspending is acceptable and there are no sanctions for failure. You may find some of my following comments harsh; I can’t apologise for this as I need to be unambiguous in my assessment of the position so that we can move forward and take the necessary actions.”
Mr Bowmer added adult social care had taken a large proportion of the savings in the 2015-16 budget - £28m of the £68m required – in a move to protect the under-pressure children’s social care budget. However, he said only half of these savings had been delivered, “with few of the proposals fully developed”.
Mr Bowmer said: “Most worrying is the seemingly defensive and non-compliant behaviour of the management team with what could be viewed as a ‘can’t be done’ attitude pervading.
“Indeed, with the proposed reduction of £7.5m on learning disability services which came forward in late November 2014 at times more energy was put into expressing unfairness rather than exploring strategies to meet the challenge,” he said.
The letter said there was a “strong reluctance” by the then director of children’s, families and education to make a contribution to the financial position as he was focused on a re-inspection of services following previous failings.
Despite Northamptonshire being a “low taxing and predominantly low spending authority”, Mr Bowmer said the council invested the eighth highest amount in children’s social care of the 27 shire counties in 2014. A further £20m was invested in these services in 2015-16, but the department had still overspent by £21m at the time the letter was written.
“Further use of reserves and balances cannot be an acceptable means to solve our predicament and at this I’m drawing a red line on further application beyond those already committed,” Mr Bowmer said. “We are fast approach [sic] the point at which it will be impossible to set a budget in February.”
He went on to write: “This is without any doubt a financial crisis and demands a change in approach; consensual and collaborative isn’t working and won’t see any meaningful engagement from the service directors.
“It is a time for a very direct approach and this has to be from you and more importantly the leader and his cabinet.”
Noting the letter in a best value inspection report after Northamptonshire issued a section 114 notice in February, lead inspector Max Caller said: “The inspection team find it difficult to see why action was not taken by the management team and leading members at that point, given the stark warning.
“The inspection team has been unable to find any record of more effective budgetary control following that correspondence.”
Northamptonshire issued a second section 114 notice earlier this month after reporting a budget shortfall for this current financial year of £60m-£70m on an overall net revenue budget of £441m.
Leader of the council Matt Golby (Con) said: “This letter clearly outlines the challenges the council was facing at that time. Those very same issues have since gone on to become contributing factors to the current financial crisis we are dealing with.
“With new senior management and political leadership in place it is now our determination to directly confront these issues and return the council to living within its means.”